why so little been paid to creditors

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tobeornot

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Post by tobeornot » Fri Jul 23, 2010 12:46 pm
Hi,

I have been in a IVA for over 2 years and have recently received my statement only to my disgust that my original creditors have only received £287.00 from the IVA company, i have telephoned my IVA company and they have told me the rest the money paid in (about £7000 so far) is to cover there fees!!!!

I can only hope they have got this wrong, what is the point in paying into a IVA if the creditors dont get the money! please help
 
 

Tina Shortland

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Post by Tina Shortland » Fri Jul 23, 2010 12:51 pm
Hi tobeornot - welcome to the forum.

Your IP should have explained the fee structure to you when you signed your proposal so that this isn't a surprise. The creditors know that a chunk of the IVA pot will go to your IP for all the legal fees - they allow this as part of the legal process that ensures they get a guaranteed return from you instead of almost nothing in bankruptcy.

Its a bit like a repayment mortgage in some ways, in that to begin with the majority of the payments made do not go towards the main debt but are still a necessary part of the overall arrangement.

Hope that makes sense!

Regards,
Regards, Tina Shortland, Debt Advisory Manager for Melanie Giles at Debt Advice TV.

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kallis3

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Post by kallis3 » Fri Jul 23, 2010 12:51 pm
Hi, and welcome to the forum.

They are probably right.

Your creditors are obviously happy with this, so don't worry.
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Tina Shortland

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Post by Tina Shortland » Fri Jul 23, 2010 12:52 pm
I might add though that £287 to your creditors for 2 years does seem somewhat tight but only your IP can answer questions about the specific numbers!
Regards, Tina Shortland, Debt Advisory Manager for Melanie Giles at Debt Advice TV.

If you’re looking for effective debt related information, articles and news, then go now to our on-line advice service at www.debtadvicetv.com

If you’re ready to ask us for specific advice or help, then get in touch at www.call-me.debtadvicetv.com so you can start to free yourself from the stress and anxiety of overwhelming debt.
 
 

tobeornot

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Post by tobeornot » Fri Jul 23, 2010 12:57 pm
this seems like daylight robbery to me, so this is common, how much do IVA companies make then from each person?

do you think I`m better of going bankrupt?
 
 

Tina Shortland

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Post by Tina Shortland » Fri Jul 23, 2010 1:06 pm
Its not robbery, its the cost of putting a legally binding agrement in place to the satisfaction of your creditors so that they are happy to write off debt for you.

Your monthly payment would have been set at what you can afford each month and your creditors will have agreed to what they are happy to allow to go to the IP to cover all necessary costs so it makes no odds to you. The alternative would have been paying into a DMP where yes, there would not have been the same chunk of fees upfront but you would have had no legal protection and not written off any debt.

Bankruptcy may well have been an option but I would have hoped you had the opportunity to go through all options beforehand to weigh up which suits you best. If you go BR now you will gain nothing as you will still have to make another 3 years of payments and you will adversely affect your creditors if the money they receive is what you are concerned about.

you have got what you want in having debt written off and being legally protected at the same time and your creditors are happy with the arrangement in place otherwise they wouldn't have voted yes.

I'd say stick with it!

Best wishes,
Regards, Tina Shortland, Debt Advisory Manager for Melanie Giles at Debt Advice TV.

If you’re looking for effective debt related information, articles and news, then go now to our on-line advice service at www.debtadvicetv.com

If you’re ready to ask us for specific advice or help, then get in touch at www.call-me.debtadvicetv.com so you can start to free yourself from the stress and anxiety of overwhelming debt.
 
 

tobeornot

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Post by tobeornot » Fri Jul 23, 2010 1:14 pm
thanks for the reply, your points are noted but you must agree that £7,000 to make a agreement is a hell of a lot of money, i cannot believe this happens,.

just for the record in bankruptcy you dont always get a Income payment order as this is dictated from your income and expenditure, so telling me i would HAVE to pay for 3 years in bankruptcy is incorrect
 
 

wannabedj

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Post by wannabedj » Fri Jul 23, 2010 1:18 pm
My statement should come any time now so I'll post on here what mine is. My payments £210 per month though
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Tina Shortland

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Post by Tina Shortland » Fri Jul 23, 2010 1:21 pm
Sorry tobeornot I made the safe assumption that if you are currently paying an IVA amount each month from disposable income you would therefore be in a position to make an IPO. Someone who had nothing would not, you are quite correct, and they would not be in a position to do an IVA either.

It will be interesting to see what your statement says in 12 months time.

Best wishes,
Regards, Tina Shortland, Debt Advisory Manager for Melanie Giles at Debt Advice TV.

If you’re looking for effective debt related information, articles and news, then go now to our on-line advice service at www.debtadvicetv.com

If you’re ready to ask us for specific advice or help, then get in touch at www.call-me.debtadvicetv.com so you can start to free yourself from the stress and anxiety of overwhelming debt.
 
 

tobeornot

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Post by tobeornot » Fri Jul 23, 2010 1:40 pm
it certainly would, i think a bankruptcy is going to be the way i go, thanks for your answers anyway, please be careful of the advice you give though as I only knew about the income payment order from a friend who was told this and never got one at all, so if i would not have known this you would of mis lead me,

thanks again
 
 

Tina Shortland

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Post by Tina Shortland » Fri Jul 23, 2010 1:46 pm
Thanks for your word of caution tobeornot - worry not - if you were not currently in an IVA paying an amount already I would have worded my advice to you very differently so you would have not been mislead.

Keep us all posted on how you get on either way.

:-)
Regards, Tina Shortland, Debt Advisory Manager for Melanie Giles at Debt Advice TV.

If you’re looking for effective debt related information, articles and news, then go now to our on-line advice service at www.debtadvicetv.com

If you’re ready to ask us for specific advice or help, then get in touch at www.call-me.debtadvicetv.com so you can start to free yourself from the stress and anxiety of overwhelming debt.
 
 

MelanieGiles

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Post by MelanieGiles » Fri Jul 23, 2010 1:49 pm
The IPs fees are dictated by your own IVA proposal which you made with your creditors. The time to question the level of charges was perhaps more appropriate at the time the proposals were signed and not now - athough it seems odd that fees have been drawn with little paid to creditors.
Regards, Melanie Giles, Insolvency Practitioner
 
 

MP1965

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Post by MP1965 » Fri Jul 23, 2010 1:56 pm
Hi tobeornot

I paid a total of £7,400 fees which was nominee & supervisor fees.

To be honest it did not bother me because I had a payment every month which was affordable to me & the fees came out of that. It wasn't as if I got a separate bill for £7,400!

So what if the creditors don't get any funds for the first 2 years, they are fully aware of the fees involved & you are protected by the IVA so there is nothing they can do!

As long as you stick to your payments you have nothing to worry about & are on the road to being debt free!
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Michael Peoples

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Post by Michael Peoples » Fri Jul 23, 2010 1:58 pm
I do not think Tina was in any way trying to mislead anyone. Without the specifics of your case she can only speak in generalisations but even so what she has said is absolutely correct.

However, if you live in Northern Ireland it is unlikely that you would get an IPO at all unless your income is substantial and some ORs pursue IPOs more aggressively than others. These are things explained to each client on an individual basis.

If you go bankrupt now your credit file is going to be damaged for a further 6 years and given that you do not appear to be struggling with the payments I completely agree with Tina that bankruptcy may not be your best route. You seem to be annoyed that your IP has been paid for the job and the fees are agreed between the IP and your creditors. If your creditors deemed them to be excessive these fees would have been cut and there may also be funds retained for bankruptcy which would be a part of the £7,000. Do not put yourself in a potentially worse situation as a result of pique as you may be 'biting your nose off to spite your face'.
Michael Peoples | McCambridge Duffy Insolvency Practitioners
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If you would like to talk to me about proposing an IVA or have any questions at all please visit www.mccambridgeduffy.com
 
 

animaleyes76

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Post by animaleyes76 » Fri Jul 23, 2010 2:13 pm
I'm nearly 3.5 years in and in my last annual review it said that no money at all had been sent to my creditors so don't worry.
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